BofA’s Moynihan: There’s No Magic Bullet for US Economy… Sam Zell: Euphoria Will End, Stocks Will Tumble… Cullen Roche: “When The Air Comes Out of The Bubble, The Situation Gets Exacerbated On The Way Down.”

Bank of America CEO Brian Moynihan sees nothing flashy in the comeback of the American economy — just a slow and steady slog that will continue.

Moynihan told The Globe and Mail he still observes an abundance of caution among the bank’s clients, both business owners and entrepreneurs, despite it being five years since the 2008 financial crisis.

“They are pretty conservative right now because of the uncertainty … It is kind of ‘I will do everything to make money and serve my customers well, but I will do it really thinking through whether I am overextending myself.'”

“Right now you are buying at an all-time high,” Zell said at a hedge fund conference in Las Vegas, according to Fortune magazine. “And there are times when stocks hit a high, and then go higher, but that’s when you have a good economy.”

Stocks are up 15 percent so far this year and the Dow Jones Industrial Average has passed 15,000 for the first time. But while stock prices are booming, underlying fundamentals remain weak, said Zell, chairman of Equity Group Investments, noting his own companies are still struggling to increase revenues.

“The current euphoria in the stock market will be adjusted,” Zell stated, Fortune reported. “And I hope that’s all that happens.”

The largest banks in the United States often report earnings in very odd ways, a process that can confuse even the best analysts, and it is usually due to intelligent accounting tricks that give management the ability to meet or slightly exceed estimates whenever it is required. This is good for the firm, analysts like it, and, arguably, investors like to feel assured that the firms will at least meet their earnings-per-share (EPS) numbers, but one thing these firms cannot massage is revenue.

I have taken a close look at the revenue reporting from four of the major banks in the United States to see if there are any patterns or consistencies. I have included J.P. Morgan JPM +1.37% , Bank of America BAC +1.85% , Citigroup C +1.64% and Wells Fargo WFC +0.41% . My conclusion is that the move in the Financial Sector ETFXLF +0.78% this year, +17% year-to-date, places it at an excessive relative valuation, and investors should consider selling or maybe even betting against it.

But the worry is that a drop in stock prices could force margin borrowers to sell off their stocks, creating a cascade of selling.

“When the air comes out of the bubble, the situation gets exacerbated on the way down.” Cullen Roche, founder of Orcam Financial Group, a research and consulting firm, told The Journal,

“As the market surges we inevitably see a sort of Ponzi effect in the market where more confidence breeds more credit and the bidding up of prices. It works until it doesn’t and when it doesn’t the air sure comes out fast,” Roche wrote on his Pragmatic Capitalism blog.

“My guess is we’ve actually already surpassed the all-time high though we won’t officially know until April data is released,” he stated.

“Fun times knowing we live in a world that is built on such a fragile foundation.”